Discussion:403(b) Plan Employee Contributions - NonCompliance Disclosure
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| Revision as of 00:08, 24 June 2009 Natalie (Talk | contribs) (It seems to me n) ← Previous diff |
Revision as of 14:28, 24 June 2009 Mikelim (Talk | contribs) (I was leaning to) Next diff → |
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| {{ForumReplyPost|UserID=Natalie|Date=June 24, 2009|Text=It seems to me no disclosure is required unless you think that there is a possibility your client will incur penalties and those penalties will be material with respect to the financial statements. }} | {{ForumReplyPost|UserID=Natalie|Date=June 24, 2009|Text=It seems to me no disclosure is required unless you think that there is a possibility your client will incur penalties and those penalties will be material with respect to the financial statements. }} | ||
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| + | {{ForumReplyPost|UserID=Mikelim|Date=24 June 2009|Text=I was leaning toward disclosure, as it was an issue of non-compliance, so materiality wasn't the main issue. | ||
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| + | I was more worried about the possibility of the violation causing the plan to be disqualified by the IRS/DOL. However, given that they rectified it after year end, and they have not received any other notices and I have no cause to believe they will receive any, perhaps no disclosure is necessary.}} | ||
Revision as of 14:28, 24 June 2009
Discussion Forum Index --> Accounting Questions --> 403(b) Plan Employee Contributions - NonCompliance Disclosure
| 23 June 2009 | |
| I have a client that I am drafting an audit report for; through my procedures, I discovered that they were in violation of DOL regulations regarding the deposit of employee conributions to the Company 403(b) plan. The issue is that, per ERISA, they are supposed to deposit the contributions by the 15th of the following month, or as soon as reasonably practical.
They did not do this; because of cash flow issues, they withheld the contributions, but did not deposit them until after year end. They are technically out of compliance, but they subsequently rectified it after year end. They did not receive any notices about plan violations. I have been searching my disclosure libraries for something that would cover this, but have not found anything on this specific topic. I was just going to disclose that they were out of compliance, but Management had subsequently rectified this. Anybody have a similar situation? | |
| June 24, 2009 | |
| My understanding is that the employee portion of contributions is required to be deposited as soon as the amounts are identifiable but no later than seven business days after they were withheld. This is the safe harbor rule. It is actually recommended deposits of the employee portion be deposited as soon as possible.
It sounds like you notified management of this issue. That is the first step. I am not sure it needs to be disclosed in the statements, however. Perhaps someone else can answer that. | |
| June 24, 2009 | |
| It seems to me no disclosure is required unless you think that there is a possibility your client will incur penalties and those penalties will be material with respect to the financial statements. | |
| 24 June 2009 | |
| I was leaning toward disclosure, as it was an issue of non-compliance, so materiality wasn't the main issue.
I was more worried about the possibility of the violation causing the plan to be disqualified by the IRS/DOL. However, given that they rectified it after year end, and they have not received any other notices and I have no cause to believe they will receive any, perhaps no disclosure is necessary. | |
